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Venezuela’s Parliament Says Upcoming Cryptocurrency “Petro” Is Illegal

What next for the President's new currency?

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Petro, an oil-backed cryptocurrency created by the Venezuelan President, has been declared null and void by parliament.The President’s idea was to create a national cryptocurrency backed by oil, diamond reserves, gold and gas. Plans for the national cryptocurrency were first announced in December 2017 as a way of moving Venezuela into new forms of international financing, not to mention social and economic development.

Since the announcement of the new cryptocurrency, President Nicolas Maduro has assigned about 5 billion barrels of crude oil, and secured miners who will back the creation of the cryptocurrency. He also proceeded to give out Petros amounting to $100 million, with the promise of releasing a whitepaper by January 14th.

Parliaments Declares Petro Illegal

Maduro plans to have the price and value of Petro pegged to Venezuela’s oil and fuel baskets, with the price closing at $59.07 as of last week’s report by Reuter. According to legislators in Venezuela, although the cryptocurrency might end up being successful, the whole project would be null and void when Maduro leaves office anyway. This year marks his re-election year.

The upcoming Petro project was on Tuesday declared null and void by the national assembly of Venezuela. El universal quoted parliamentarian’s unanimous vote of “absolute nullity on the issuance of the petro cryptocurrency”

According to Deputy William Davila, the move by parliament to denounce plans for the cryptocurrency, was made to prevent attempts by the government to “evade financial sanctions, openly violating the constitution, and legitimizing illicit transactions.”

In the same breath, Jorge Millan (also a Venezuelan legislator) was quoted saying that Petro “is not a cryptocurrency” but that it is a “forward sale of Venezuelan oil” and “it is tailor made for corruption.”

Venezuela’s Economy

However, in addition to the concerns of the Venezuelan parliament, there have been doubts over petro’s credibility, especially with news outlets in Venezuela reporting of the free fall of the Venezuelan fiat currency. The currency has lost 57 percent of its value in the last month alone, leaving millions in destitute economic situations. As a result of the country’s hyperinflation, people have looked to Bitcoin, with the President calling for active repudiation of the decision by parliament to outlaw Petro.

Reuters reports however, that Maduro has been known to ignore decisions by the parliament since 2016 when his party lost majority control.

Image Credit: Deposit Photos

What do you think Maduro’s next move will be? Will he continue with the Petro project regardless? Share your thoughts and opinions with us in the comment section.

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